Initial Coin Offerings (ICOs) may signal the beginning of a new cycle in the history of value in human society. This article is not about Bitcoin, or any other particular cryptocurrency, or even blockchain technologies. However, through these developments, we are seeing radical experiments that are transforming social interactions and social structure.
As humans, our first priority is survival. Animals seek food to maintain their lives. They seek shelter to protect themselves from being food for other animals. Very few animals have figured out the concept of “tools”, using devices outside of their body to help them secure food or protection. Indeed, this is often considered as a key difference between humans and other animals, even primates.
Was the invention/discover of fire the most seminal breakthrough? As a result of that step, man gradually rose to the apex of the food chain. Through tools and weapons, humans could defeat animals that were much stronger, faster, or more powerful physically.
Then, resources became the first-order representations of value. Natural resources, like wood or metal, could be fashioned into tools that would ensure physical survival. They also enabled commerce, exchange of one kind of value for another, beginning with the barter system. Note that the value of items being bartered had to be agreed between the parties to a transaction. If I was trying to exchange my bushel of vegetables and wanted chickens, I would have to find someone who had a couple of chickens and who acknowledged the equivalency of value. If you accepted the value of a bushel of vegetables to be equivalent to a couple of chickens, then you and I might make such a deal. Standards resulted from some level of consensus among a social group or a village. Eventually, these standards could be expressed in some form of currency, a hugely important invention to enable commerce on a broader scale with greater convenience for all. The earliest forms of money were: cowry shells, coins (of various metals), gold, silver and paper. Once governments got involved, issues of control and taxation led to more sophistication in a financial infrastructure.
For the last few hundred years, we have been living in an age of second-order representations of value. We have harnessed human creativity, the ability to build on the ideas of others to develop new forms of value:
Value for learning: compiled knowledge in the form of books
Value for appreciation: diverse forms of art
Value for ego: human creations that reflect human love and admiration for ourselves
Value for spirituality: creations (natural and man-made) that honor spiritual beliefs
Thanks to the tech stimulation to our collective intellectual power, we are definitely at the threshold of a new age. Note that this transition has been explored already by science fiction writers, filmmakers, and others whose imaginations exceed societal norms. In Silicon Valley, one label is “The Singularity”, which Ray Kurzweil, noted futurist and Google executive, recently predicted as having begun and becoming commonplace by 2029. Basically, the idea is that artificial intelligence, next-generation computing, will exceed human abilities.
By then, data itself will be a third-order representation of value. Data will have value not merely because it is a measure of something we already know and are familiar with, tangible or not, but rather because combining data will enable new knowledge, new insights. Data will, in a sense, be able to generate value, through software processes that may be opaque to humans.
Initial Coin Offerings (ICOs) are typically perceived as newly invented financing mechanisms for companies (and communities) that want to support blockchain (software and data) developments. By participating as an “investor,” by trading an existing form of currency, such as US dollars, or a digital currency, such as Bitcoin or Ethereum, you can receive a newly invented “token,” a “coin,” which will be a proprietary representation of value. Through this transaction, you might hope that, as more people use these tokens, their value as a medium of exchange will increase. How intriguing that the entire process is very much a self-fulfilling prophecy! Value will be created among a community of people, only when the participants agree that this is the desired outcome. Agreement is the key.
Political idealists see the blockchain as a way to “true democracy.” Creative artists, including software developers, see a way to have their value acknowledged beyond the conventional metrics of labor, for hours spent in someone else’s employ. What kind of value can be developed that doesn’t depend on a central authority or some kind of “expert”? Can a blockchain be designed specifically for a work of art as so it can provide for its own maintenance, without human intervention? Yes – search on Primavera di Filippi, a researcher at Harvard.
Could this lead to an ultimate kind of entrepreneurship where each one of us can define our own particular value – and receive feedback (and collaboration) from a community of friends and supporters?